The funds will be used to finance the expansion of mechanised warehouses used for storage of grains. This is the first of three rounds of funding planned for the expansion of the Karthikeyan family’s agriculture related businesses, in which it plans to pump up to $250 million to set up grain storage facilities across states in India such as Punjab, Assam and Delhi.

Leap India has already obtained long-term contracts from certain state governments for setting up such facilities on a public-private partnership model.

“We believe in promoting businesses with positive social impact and it is important for us to partner with funds who have a similar philosophy,” Karthikeyan, Leap India’s chairman, told ET.

The Kathikeyan family runs the PSG Group of educational institutions in southern India and also has interests in clean energy through Leap Green, amongst the largest producers of wind energy for the private sector. It is also involved in the textiles business.

“They have deep expertise and are on the verge of creating a large company in the agri-silo and logistics space,” said Manav Bansal, chief executive officer of Neev Fund.

The government has opened up the agriculture storage sector to private participation and has auctioned close to 100 steel silos or mechanized steel warehouses for grain storage on 30-year contracts to private players.

The onus of building the facilities is on the private player which wins the auction for each such silo and receives a fixed fee for operations and maintenance of these silos. The government plans to set up 1,000 such storage facilities with average capacity to store up to 50,000 tonne of grain.

“Automated storage can save up to 20% of foodgrains. The business model is also sound for private players because their counterparties are Food Corporation of India and state governments which ensures payments will happen,” said Sudhir Dash, former managing director at investment bank Investec.

The construction of the planned silos could cost an estimated Rs 50,000 crore, according to industry analysts.

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